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Reading: Section 194 (i) of the Income Tax Act- TDS on Rent
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Investment Simplified > Tax > Section 194 (i) of the Income Tax Act- TDS on Rent
Tax

Section 194 (i) of the Income Tax Act- TDS on Rent

Ashish Kumar
Ashish Kumar January 11, 2023 3 Min Read
Updated 2023/01/11 at 6:20 PM
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Section 194 (i) of the Income Tax Act refers to the Tax Deducted at Source (TDS) on rent. The Section 194 (i) is particularly for individuals earning income from rent. Since rent received on property is subjected to TDS, it is an additional income earned by the person by subletting their property.

Contents
What is Section 194 (i) of the Income Tax Act?Meaning of Rent in terms of Section 194 (i)Tax Deduction at Source (TDS) Rates of Section 194ITDS on Rent Returns Filing Due DateExceptions for TDS on Rent Deduction under section 194I of the Income Tax ActSection 194I of the Income Tax Act- FAQs

What is Section 194 (i) of the Income Tax Act?

The Finance Act, 1994 introduced the section 194I regarding the deduction of tax while paying rent. The section 194I states that any person, whether an individual or HUF who receives income on rent is liable for TDS when the income credited is more than ₹2,40,000 in the financial year. The TDS threshold for deduction of tax on rent is ₹2,40,000 for the FY 2022-23, while the threshold limit until FY 2018-19 was ₹1,80,000.

Meaning of Rent in terms of Section 194 (i)

Rent refers to any payment received under any sub-lease/lease/tenancy/agreement for the arrangement for the use any-

  • Land
  • Building
  • Machinery
  • Industrial Plant or Manufacturing Facility Plant
  • Equipment such as tools, computer systems, other infrastructure required for running a business
  • Furniture
  • Fittings

Tax Deduction at Source (TDS) Rates of Section 194I

Tax or TDS is applicable when the payee transfers/credits the rent amount ‘income by way of rent’ to the landlord’s account. The TDS will be deducted at the time of crediting/paying the rent through cheque/draft/cash, etc.

The below given table is the rates of tax deduction under section 194I-

Nature of Property/AssetRate of TDS on Rent
Rent paid for plant, machinery, or equipment2%
Rent paid for land or building10%
Rent paid by an individual/HUF whose turnover does not exceed the limits specified in 194-I5% (provided the rent paid exceeds Rs. 50,000 per month) u/s 194IB
Rent paid for furniture or fittings10%

TDS on Rent Returns Filing Due Date

The table-mentioned below are the dates for filing the return for TDS on rent-

PeriodDue Date to deposit TDS on Rent
April to June30th July
July to September31stOctober
October to December31st January
January to March30th May

Exceptions for TDS on Rent Deduction under section 194I of the Income Tax Act

Under Section 194I, TDS is not deducted under following situations-

  1. No TDS will be deducted if the rent amount whether due or paid, is up to ₹2.4 lakhs
  2. If the tenant is individual or HUF whose turnover is not more than ₹1 crore in case of business and ₹50 lakh is case of profession during the financial year
  3. If the payee is government, statutory or local authority

Section 194I of the Income Tax Act- FAQs

What is the section for TDS on rent?

TDS on Rent rules as per section 194 (i).

Who pays TDS on Rent?

All the individuals or Hindu Undivided Family (HUF) except those citizens who are subject to tax audit under clause A and B of Section 44AB.

Do landlords pay tax on rent?

Any amount of income received from rent including residential property, shop, building or a factory plant comes under taxation process.

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Posted by Ashish Kumar
Ashish Kumar is a SEO content writing enthusiast and an avid blogger who closely follows the latest financial trends. He writes about various topics related to Insurance, Aadhaar, PAN, Banking and other financial products.
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